Ground Zero developer Larry Silverstein is being urged to speed up his rebuilding effort - or lose some public funding, sources said yesterday.
The behind-the-scenes push comes as Mayor Bloomberg and Gov. Pataki suggested publicly that some of the $3.35 billion in tax-free Liberty Bonds Silverstein is counting on could go to other developers.

Silverstein, who leases the site from the Port Authority, is finishing one office tower, plans to start the 1,776-foot Freedom Tower in the spring and hopes to erect four more office buildings. But questions have arisen about whether he can line up the prospective tenants he needs to keep the projects moving.

"There are a variety of projects [the bonds] could be used for," the mayor said. "Some are Silverstein projects, some are other projects."

Pataki said a bigger role by the Port Authority and "private-sector investors" might be best.

Sources said the Port Authority wants to renegotiate its lease with Silverstein so the agency can move up development of two Church St. sites.

In one scenario sketched for the Daily News by city and state officials, the timetable being put to Silverstein could prove difficult to meet. If he falls short, the Liberty Bonds could be diverted, further hampering his plans.

A hearing on the bond application is set for this morning. Pataki and Bloomberg must sign off on Silverstein's bid before a vote by the city's Industrial Development Agency board, which will meet Tuesday.

Silverstein said he's being slowed because some of the sites aren't ready for construction.

"Construction cannot proceed until government finishes excavating," Silverstein said, noting that the timetable for three sites to be ready is mid-2008.
BY LISA L. COLANGELO
and PAUL D. COLFORD
DAILY NEWS STAFF WRITERS